from the betcha-knew-that dept

Back in 2007, we wrote about a startup that was trying to sneak its way through anti-online gambling laws by trying to squeeze through a loophole. The site, called Betcha, would let people bet each other on various things, but which let bettors renege on any bet if they lost. Of course, doing so would give you negative feedback on your profile. However, the site argued that because anyone could bail out of a bet, it wasn't illegal gambling. Authorities in Washington State (who have one of the strictest anti-online gambling laws around) disagreed. A district court said the site was illegal... but an appeals court reversed, saying that the presence of the renege button mean there was "nothing risked" and thus, it did not meet the definition of gambling.

The court's opinion makes it clear that expansive anti-gambling laws leave almost no room for entrepreneurial yet legal Internet gambling enterprises. Here, Betcha is tripped up by the definition of "bookmaking," defined as "accepting bets, upon the outcome of future contingent events, as a business or in which the bettor is charged a fee or "vigorish" for the opportunity to place a bet." This strikes at Betcha's model of charging the parties to communicate with each other regarding betting. The court is not swayed by Betcha's formalist argument that because the loser could renege on the bet, the wager did not meet the statutory definitions for gambling. The court says the bookmaking definition applies whether the bets are made for money or not.